PM clarifies income tax rate for low-income salaried class, New Lower rate confirmed

ISLAMABAD: Prime Minister Shehbaz Sharif clarified on Wednesday that the income tax rate for salaried individuals earning between Rs600,000 and Rs1.2 million annually has been reduced to 1%, not 2.5% as previously reported.

His statement aimed to address growing confusion surrounding the first tax slab under the new Finance Bill.

Confusion Over Budget Figures

Earlier, Finance Minister Muhammad Aurangzeb, during his budget speech, stated that the tax rate for the lowest slab would be 2.5%. This led to widespread uncertainty among salaried taxpayers.

Sources later revealed that the federal cabinet had initially approved the 2.5% rate to help manage the fiscal impact of the salary hikes for government employees announced in the same budget.

Adding further clarity, the Federal Board of Revenue (FBR) chairman informed a parliamentary committee that under the revised rate, only Rs1,000 in tax would be applied to a monthly income of Rs100,000, reflecting a 1% rate.

This confirmation aligns with the PM’s statement, putting to rest the earlier speculation.